The current administration and its predecessor have brought sustained attention to the urgent strategic problem of American shipbuilding, but a prospective deal for icebreakers could place this essential work in jeopardy.
On October 9, President Trump signed a memorandum of understanding with Finland for a “block buy” of U.S. Coast Guard icebreakers, with the first four to be built in Finnish shipyards followed by seven to be built in American ones. Jerry Hendrix, a longtime friend and colleague (and past contributor to this publication) who now leads the White House Shipbuilding Office, celebrated online that “President Trump’s command of the Art of the Deal was on full display” and suggested that the same model could allow foreign construction of U.S. Navy warships. However, President Trump’s deal may in hindsight be remembered as an expression of the art of the giveaway, particularly if he allows this precedent to affect his upcoming engagements with South Korea this week. Far from the answer to America’s shipbuilding woes, agreeing to outsource warship production overseas is mutually exclusive with the strategically vital and bipartisan project of an American maritime renaissance, and instead risks putting that shared objective out of reach.
The sovereign ability to build the fleet needed on a relevant timeline and at an affordable cost is worth far more than any short-term infusion of foreign-built hulls. History is instructive. The U.S. Navy’s victory in the Battle of Midway is remembered as the product of Adm. Chester Nimitz’s daring “calculated risk” to commit virtually all the Pacific Fleet’s remaining capital ship strength to ambush a more powerful Japanese force. Nimitz could only make this bold gamble because he knew that a fleet much larger than the one he might lose in the coming engagement was nearing completion in American shipyards. Even in the event of tactical defeat, America could replace her losses while Japan could not. Indeed, after a year of fighting, four of the U.S. Navy’s six frontline aircraft carriers in commission at war’s opening lay at the bottom of the Pacific, a shockingly aggressive attrition rate that could only be accepted or sustained because of America’s shipbuilding juggernaut. The logic remains true: ships win battles; shipyards win wars.
Regrettably, America’s maritime industry is not what it was in 1942. The United States is suffering the results of two disastrous policy choices in the 1980s and 1990s, first to cut off government support to U.S. commercial shipping and shipbuilding, allowing both those industries to wither; and then to encourage consolidation of the remaining naval shipbuilding base into uncompetitive and underperforming monopoly-monopsony relationships. President Trump has evidently been persuaded of the central thesis underlying the Maritime Statecraft strategy that I helped conceptualize and implement beginning in 2022 under the leadership of Navy Secretary Carlos Del Toro. That thesis: market competition via investment in U.S. shipyards by world-class commercial and naval shipbuilders from U.S. allies is the only way to jolt domestic industry into building the ships America needs on time and on budget. This approach has already yielded formidable results, with one of Korea’s foremost shipbuilders, Hanwha, purchasing the Philly Shipyard last year and committing to invest $5 billion to modernize its facilities, double the workforce, and multiply output tenfold. Likewise, Finnish and Canadian icebreaker specialist Davie Shipbuilding last year declared its intention to purchase a shipyard in Texas to bring the firm’s icebreaking prowess to American shores. All this and more was gained without the U.S. government having to accede to outsourcing construction of a single new ship abroad.
While President Trump has until now admirably carried forward and expanded on these accomplishments, his move to outsource icebreakers could run the whole enterprise aground.
There are a number of well-founded reasons why the United States does not and should not outsource its naval shipbuilding abroad. One is the need to assure technical security of U.S. designs and systems against foreign compromise. Another is the strategic vulnerability of the most relevant allied shipyards, all of which lie within reach of either China or Russia’s plentiful arsenals of short-range missiles. But the most compelling rationale is the business case. America’s most powerful leverage to induce world-class shipbuilders to invest in U.S. shipyards is access to the highly lucrative U.S. government and naval shipbuilding market. The model espoused by President Trump surrenders America’s best negotiating position for little gain, and could even undo the progress made thus far. Why would a foreign shipbuilder expend time and treasure to bring their technology, expertise, and best practices to America to capture U.S. government business tomorrow if the U.S. government chooses to give its business overseas for nothing concrete in return today? An appropriately hard-nosed deal would both require and support allied shipbuilders to complete the whole block buy in the United States via their new American subsidiaries. Instead, President Trump’s agreement to outsource, even as a nominal stopgap, not only slows foreign investment in America but disincentivizes it, effectively punishing firms that have moved out quickly on a U.S. investment while rewarding those that have dragged their feet.
Moreover, President Trump’s deal as now structured is entirely dependent on the continuing good faith of the foreign shipyard, a perilous disposition of risk even with the most forward-leaning partner. What would stop a foreign shipbuilder from reaping the profitable fruits of the initial outsourced ships before reneging on their promised U.S. investments over some genuine or pretended obstacle, leaving “no choice”—they would claim—but for the entire order to be completed overseas? Given the difficulties that are almost certain to arise in onshoring shipbuilding expertise and technologies, America needs all the leverage she can muster to ensure foreign shipbuilders follow through with their long-term commitments.
The next inflection point could be just around the corner with the Asia Pacific Economic Community summit in South Korea, an ally of surpassing importance in an American maritime revival. In tariff negotiations this summer, the Trump administration gained what could prove to be a major advance in the form of the South Korean government’s “Make American Shipbuilding Great Again” proposal, which offered $150 billion in loans and loan guarantees to facilitate investment by South Korean firms into the U.S. shipbuilding industry. This initiative notably did not insist on U.S. government outsourcing, the South Korean government having rightly designed a durable framework that recognizes and conforms with the longstanding U.S. laws and strategic imperatives that require U.S. warship construction to take place in the United States. But the precedent set by the administration’s icebreaker agreement with Finland, combined with President Trump’s off-the-cuff comments with the president of South Korea in August that appeared to open the door to outsourcing, could upend this far more significant prospective accomplishment of expanded Korean investment in the U.S. shipbuilding industry. This week’s summit, where President Trump hopes to finalize the trade deal with South Korea and may visit a South Korean shipyard, could therefore prove to be a make-or-break moment for America’s maritime statecraft.
Given the business incentives at work, continuing down the path of the icebreaker deal and further surrendering to the siren song of outsourcing would make it much more likely that President Trump’s thus-far nominal victory from trade negotiations with South Korea will remain an unrealized paper promise. This would throw away a historic opportunity and the chance for a lasting legacy of steel, concrete and jobs on U.S. waterfronts. It would, instead, mortgage America’s maritime future for the short-term sugar high of a brace of foreign-built ships.
A wiser course would be to stand firm on the sound logic, established law, and trusty leverage of the negotiating position that America only builds her warships in America, while holding the door open wide for world-class shipbuilders wishing to join that noble endeavor to bring their talents here. Only sustained long-term investment in the United States by preeminent allied shipbuilding players can restore the health of American seapower.
Hunter Stires served as the Maritime Strategist to the 78th Secretary of the Navy, where he was recognized for his work as one of the principal architects of the Maritime Statecraft strategy.
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